Fill in each statement with the appropriate capital budgeting method: payback period, ARR, NPV, or IRR.
a. _____ measures profitability but ignores the time value of money.
b. _____ and _____ incorporate the time value of money.
c. _____ focuses on time, not profitability.
d. _____ uses accrual accounting income.
e. _____ finds the discount rate that brings the investment’s NPV to zero.
f. In capital rationing decisions, the profitability index must be computed to compare investments requiring different initial investments when the _____ method is used.
g. _____ ignores salvage value.
h. _____ uses discounted cash flows to determine the asset’s unique rate of return.
i. _____ highlights risky investments.

  • CreatedAugust 27, 2014
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